sabine river authority compact...

OCT 11*

SABINE RIVER COMPACT ADMINISTRATION

FINANCIAL REPORT

AUGUST 31,2004

Under provisions of state law. this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date }fr 2. 7 ~

C O N T E N T S

Page

INDEPENDENT AUDITORS' REPORT 1 and 2

MANAGEMENT'S DISCUSSION AND ANALYSIS 3 and 4

FINANCIAL STATEMENTS

Basic financial statements:Government-wide financial statements -

Statements of net assets 5Statements of activities 6

Fund financial statements -Balance sheets 7Statements of revenues, expenditures

and changes in fund balance - governmental fund 8Budgetary comparison schedule 9

Notes to financial statements 10 - 12

REPORT ON COMPLIANCE AND ON INTERNAL CONTROLOVER FINANCIAL REPORTING BASED ON AN AUDITOF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 13 and 14

Schedule of findings and questioned costs 15

Schedule of prior findings 16

BROUSSARD, POCHE, LEWIS & BREAUX, L.L.P.

C E R T ED P U B L A C C O U N T A N T S

4112 West Congress

P.O.Box 61400Lafayette, Louisiana

70596-1400

phone: (337) 988-4930

fax: (337) 984-4574

Other Ojjices:

Crowley, LA(337) 783-0650

Opelousas, LA

(337)942-5217

Abbeville, LA(337) 898-1497

New Iberia, LA

(337) 364-4554

Church Point, LA(337) 684-2855

INDEPENDENT AUDITORS' REPORT

Eugene C. Gilder, CPA*

Donald W. Kclley, CPA*

Herbert Lemoine II, CPA*

Frank A. Stagno, CPA*

Scott J. Broussard, CPA*

L. Charles Abshire, CPA*

Kenneth R. Dugas, CPA*

P. John Blanche! HI, CPA*

Stephen L. Lambousy, CPA*

Craig C. Babineaux, CPA*

Peter C. Borrello, CPA*

George .1. Trappey III, CPA*

Gregory B. Milton, CPA*

S. Scott Soilean, CPA*

Patrick D. McCarthy, CPA*

Martha B. Wyatt, CPA*

Troy J. Breaux, CPA*

Fayetta T. Dupre, CPA*

Mary A. Castille, CPA*

Joey Breaux, CPA*

Terrel P. Dressel, CPA*

Ret i red :

Sidney L. Broussard, CPA* 1980

Leon K. Poche, CPA 1984

James H. Breaux, CPA 1987

Erma K. Walton, CPA 1988

George A. Lewis, CPA* 1992

GeraldineJ. Wimberley, CPA* 1995

Rodney L. Savoy, CPA* 1996

Larry C. Bromsard, CPA* 1997

Lawrence A. Cramer, CPA* 1999

Michael 1'. Crochet, CPA* 1999

Ralph Friend, CPA 2002

Members of American Institute ofCertified Public AccountantsSociety of Louisiana CertifiedPublic Accountants

To the Board of CommissionersSabine River Compact AdministrationStates of Texas and Louisiana

We have audited the accompanying basic financial statements of theSabine River Compact Administration, a component unit of the Stateof Texas and State of Louisiana, as of and for the years endedAugust 31, 2004 and 2003. These financial statements are theresponsibility of the Administration's management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in the United States of America and the standardsapplicable to financial audits contained in Government ^AuditingStandards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are freeof material misstatements. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement/ as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basisfor our opinion.

In our opinion, the basic financial statements referred to abovepresent fairly, in all material respects, the financial position ofSabine River Compact Administration as of August 31, 2004 and 2003,and the results of its operations for the years then ended inconformity with accounting principles generally accepted in theUnited States of America.

Management's discussion and analysis on pages 3 and 4 are not arequired part of the basic financial statements but aresupplementary information required by the Governmental AccountingStandards Board, We have applied certain limited procedures, whichconsisted principally of inquiries of management regarding themethods of measurement and presentation of the requiredsupplementary information. However, we did not audit theinformation and express no opinion on it.

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*A Professional Accounting Corporation

In accordance with Government Auditing Standards, we have also issued our report datedSeptember 24, 2004, on our consideration of the Sabine River Compact Administration'sinternal control over financial reporting and our tests of its compliance with certainprovisions of laws, regulations, contracts and grants. That report is an integral partof an audit performed in accordance with Government Auditing Standards and should beread in conjunction with this report in considering the results of our audit.

Lafayette, LouisianaSeptember 24, 2004

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MANAGEMENT'S DISCUSSION AND ANALYSIS

This section of the Sabine River Compact Administration (SRCA) annual financial reportpresents a discussion and analysis of SRCA's financial performance during the fiscalyear that ended August 31, 2004. Please read this section in conjunction with SRCA'sfinancial statements, which follow this section.

FINANCIAL HIGHLIGHTS

SRCA's net assets overall increased from $30,268 to $31,996 or 6% from August 31, 2003to August 31, 2004. The main reason for this change was the decrease in cash, used topay outstanding accounts payable.

SRCA's intergovernmental transfers increased from $60,460 to $62,458 or 3% fromAugust 31, 2003 to August 31, 2004. General government expenses increased to $61,083from $58,929 or 4% for the year ended August 31, 2004.

OVERVIEW OF THE FINANCIAL STATEMENTS

The financial report consists of three parts: Management's Discussion and Analysis(this section), the basic financial statements, and the notes to the financialstatements.

The basic financial statements present information for SRCA as a whole, in a formatdesigned to make the statements easier for the reader to understand. The statements inthis section include the Statement of Net Assets and the Statement of Activities.

The Statement of Net Assets presents the assets and liabilities. The differencebetween total assets and total liabilities is net assets and may provide a usefulindicator of whether the financial position of SRCA is improving or deteriorating.

The Statement of Activities presents information showing how SRCA's assets changed as aresult of current year operations. Regardless of when cash is affected, all changes innet assets are reported when the underlying transactions occur. As a result,transactions are recorded that will not affect cash until future periods.

The financial statements provide information about SRCA's overall financial status.The financial statements also include notes that explain some of the information in thefinancial statements and provide more detailed data-

SRCA's financial statements are prepared on an accrual basis in conformity withaccounting principles generally accepted in the United States of America (GAAP) asapplied to government units. Under this basis of accounting, revenues are recognizedin the period in which they are earned and expenses are recognized in the period inwhich they are incurred. All assets and liabilities associated with the operation ofSRCA are included in the Statement of Net Assets.

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FINANCIAL ANALYSIS

Net Assets

SRCA's total net assets at August 31, 2004 changed by $1,728, a 6% increase fromAugust 31, 2003. Total assets decreased 29% to $44,328 and total liabilities decreased61% to $12,332.

Changes in Net Assets

The change in net assets at August 31, 2004 is $1,728 or 6% more than at August 31,2003. SRCA's total revenues and transfers increased by 3% to $62,811 and total generalgovernment expenses increased 4% to $61,083. The general government expenses aredetailed below.

SRCA's General Government Expenses

2004 2003General government expenses:

SecretaryTreasurerWater resources investigationAudit feesOther

Total

$ 3,450800

53,3582,0001,475

$ 3,4501,800

51,9811,100598

CURRENTLY KNOWN FACTS/ DECISIONS, OR CONDITIONS

There are currently no known facts, decisions or conditions that are expected to have asignificant effect on financial position or results of operations.

CONTACTING SRCA'S FINANCIAL MANAGEMENT

This financial report is designed to provide our legislatures, state officials, theLouisiana Legislative Auditor's Office, patrons and other interested parties witft ageneral overview of SRCA's finances and to demonstrate SRCA's accountability for themoney it receives. If you have questions about this report or need additionalfinancial information, contact Debra Stagner at 409-746-2192.

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STATEMENTS OF NET ASSETSAugust 31, 2004 and 2003

ASSETS

Cash

Total assets

LIABILITIES

Accounts payable

Total liabilities

NET ASSETS

Unrestricted

Total net assets

Total liabilities and net assets

See Notes to Financial Statements.

2004

31,996

31,996

2003

$ 44,328 $ 62,112

$ 44.328 $ 62,112

$ 12,332 $ 31,844

12,332 31,844

30,268

30,268

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STATEMENTS OF ACTIVITIESYears Ended August 31, 2004 and 2003

2004 2003EXPENSES:

Governmental activities -General government

Total governmental activities

GENERAL REVENUES AND TRANSFERS:Intergovernmental transfersInterest

Total general revenues and transfers

Change in net assets

Net assets, at beginning

Net assets, at ending

$(61,083) $(58,929)

(61,083) (58,929)

62,458353

62,811

1,728

30,268

60,460462

60,922

1,993

28,275


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BALANCE SHEETSAugust 31, 2004 and 2003

Cash

ASSETS

Total assets

2004 2003

$ 44,328 $ 62,112

$ 44.328 $ 62.112

LIABILITIES AND FUND EQUITY

Accounts payableFund balance - undesignated

Total liabilities and fund equity

$ 12,33231,996

$ 44,328

$ 31,84430,268


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STATEMENTS OF REVENUES, EXPENDITURES ANDCHANGES IN FUND BALANCE - GOVERNMENTAL FUND

Years Ended August 31, 2004 and 2003

2004 2003Revenues:

IntergovernmentalInterest

Total revenues

Expenditures:General government

Net change in fund balance

Fund balance, beginning

Fund balance, ending

$ 62,458 $ 60,460353 462

62,811

61,083

1,728

30,268

60,922

58,929

1,993

28,275

$ 31.996 $ 30.268


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BUDGETARY COMPARISON SCHEDULEGENERAL FUND

For the Year Ended August 31, 2004With Comparative Actual Amounts for Year Ended August 31, 2003

2004

Revenues:Intergovernmental -Contributions:

State of TexasState of Louisiana

Interest income

Total revenues

Expenditures:General government -

Maintenance - office of:SecretaryTreasurer

Water resourcesinvestigation

Audit feesOther

Total expenditures

Net change in fund balance

Fund balance, beginning

Fund balance, ending

Originaland FinalBudget

$ 31,22931,229

-

62,458

4,300800

53,358

3,000

1,000

62,458

$ -0-

Actual

$ 31,229

31,229353

62,811

3,450800

53,3582,0001,475

61,083

1,728

30,268

$ 31,996

VarianceWith FinalBudget -Positive(Negative)

$-

353

353

850-

-1,000

(475)

1,375

$ 1,728

2003Actual

30,23030,230

462

60,922

3,4501,800

51,9811,100598

58,929

1,993

28,275

30,268


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NOTES TO FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Basis of presentation:

The accompanying financial statements have been prepared in accordance withaccounting principles (GAAP) generally accepted in the United States ofAmerica as applied to government units. The Governmental AccountingStandards Board (GASB) is the accepted standard-setting body forestablishing governmental accounting principles and financial reportingstandards.

This financial report has been prepared in conformity with GASB StatementNo. 34, "Basic Financial Statements and Management's Discussion and Analysisfor State and Local Government," issued in June 1999.

Reporting entity:

The Sabine River Compact Administration, a component unit of the State ofTexas and State of Louisiana, is an entity formed by a compact entered intoby the State of Texas and the State of Louisiana on January 26, 1953, underauthority granted by an Act of the Congress of the United States approvedNovember 1, 1951, (Public Law No. 252, 82nd Congress, First Session). TheAct was amended on October 30, 1992 (Public Law No. 102-575 of the 102Congress). The objective of the Compact is to provide equitableapportionment of the waters of the Sabine River and its tributaries betweenthe two states. The operation is administered by an Inter-StateAdministrative Agency composed of two members appointed by the Governor ofTexas and two members appointed by the Governor of Louisiana; and onemember, as representative of the United States appointed by the Presidentof the United States, which member shall be ex-officio chairman of theAdministration without vote and shall not be a domiciliary of or residentin either state.

Measurement focus/basis of accounting:

Government-wide financial statements (GWFS):

The Statement of Net Assets and the Statement of Activities displayinformation about the reporting government as a whole. These statementsinclude all the financial activities of the Administration.

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WBWMMMMlttll


The GWFS were prepared using the economic resources measurement focus andthe accrual basis of accounting. Revenues, expenses, gains, losses,assets and liabilities resulting from exchange or exchange-liketransactions are recognized when the exchange occurs (regardless of whencash is received or disbursed) . Revenues, expenses, gains, losses,assets and liabilities resulting from nonexchange transactions arerecognized in accordance with the requirements of GASB Statement No. 33,"Accounting and Financial .Reporting for Nonexchange Transactions."

Fund financial statements:

Governmental funds are accounted for using a current financial resourcesmeasurement focus. With this measurement focus, only current assets andcurrent liabilities are generally included on the statement of netassets. The statement of activities reports on the sources (i.e.,revenues and other financing sources) and uses (i.e., expenditures andother financing uses) of current financial resources. This approachdiffers from the manner in which the governmental activities of the GWFSare prepared; however, there are no differences between the GWFS and thefund financial statements as of and for the year ended August 31, 2004.

Fund financial statements report detailed information about theAdministration. The focus of governmental fund financial statements ison major funds rather than reporting funds by type. The Administrationhas only one fund, the General Fund, which by definition is always amajor fund.

Governmental funds use the modified accrual basis of accounting. Underthe modified accrual basis of accounting, revenues are recognized whensusceptible to accrual (i.e., when they become both measurable andavailable). Measurable means the amount of the transaction can bedetermined and available means collectible within the current period orsoon enough thereafter to pay liabilities of the current period.Expenditures are recorded when the related fund liability is incurred.

The two major sources of revenues are intergovernmental and interest. Bothof these are susceptible to accrual.

Budgets:

Budgets are adopted on a basis consistent with accounting principlesgenerally accepted in the United States of America. An annual appropriatedbudget is adopted for the General Fund. The budget is prepared by theSabine River Compact Administration management for formal approval by theBoard of Commissioners. Any amendments to the original budget are approvedby the Board of Commissioners. Budgeted amounts presented are asoriginally adopted and as amended. Because the Administration did notamend its budget during the fiscal year, the amounts presented as originaland final are the same.

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Cash:

Cash consists of amounts in interest bearing deposit accounts.

Note 2. Deposits

The carrying amount of deposits was $44,328 and $62,112 and the bank balancewas $44,328 and $62,112 at August 31, 2004 and 2003, respectively. Theentire bank balance was covered by federal depository insurance.

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BROUSSARD, POCHE, LEWIS & BREAUX, L.L.P.C E R T E D P U B L I C A C C O U N T A N T S

4112 West Congress

P. O. Box 61400

Lafayette, Louisiana

70596-1400

phone: (337) 988-1930

fax: (337) 984-4574

Other Offices:

Crowley, LA

(337) 783-0650

Opelousas, LA(337)942-5217

Abbeville, LA(337) 898-1497

New Iberia, LA

(337) 364-4554

Church Point, I,A(337) 684-2855

Eugene C. Gilder, CPA*

Donald W. Kelley, CPA*

Herbert Lemoinc II, CPA*

Frank A. Stagno, CPA*

Scott J. Broussard, CPA*

L. Charles Abshire, CPA*

Kenneth R. Dugas, CPA*

P. John Blanchet III, CPA*

Stephen L. Lambonsy, CPA*

Craig C. Babincaux, CPA*

Peter C. Borrello, CPA*

George ]. Trappey ITT, CPA*

Gregory B. Milton, CPA*

S. Scott Soileau, CPA*

Patrick D. McCarthy, CPA*

Martha B. Wyatt, CPA*

Troy J. Breaux, CPA*

Fayetla T. Dupre, CPA*

Mary A. Castillo, CPA*

Joey Breaux, CPA*

Terrel P. Dressel, CPA*

Retired:

Sidney L. Broussard, CPA* 1980

Leon K. Poche, CPA 1984

.Tames H. Breawx, CPA T987

Erma R. Walton, CPA 1988

George A. Lewis, CPA* 1992

Geraldine J. Wimberley, CPA* 1995

Rodney L. Savoy, CPA* 1996

Larry G. Broussard, CPA* 1997

Lawrence A. Cramer, CPA* 1999

Michael P. Crochet, CPA* 1999

Ralph Friend, CPA 2002

Members of American institute ofCertified Public AccountantsSociety of Louisiana CertifiedPublic Accountants

REPORT ON COMPLIANCE AND ON INTERNAL CONTROLOVER FINANCIAL REPORTING BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Commissioners,Sabine River Compact AdministrationStates of Texas and Louisiana

We have audited the basic financial statements of the Sabine RiverCompact Administration, a component unit of the State of Texas andState of Louisiana, as of and for the year ended August 31, 2004,and have issued our report thereon dated September 24, 2004. Weconducted our audit in accordance with auditing standards generallyaccepted in the United States of America and the standardsapplicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States.

Compliance

As part of obtaining reasonable assurance about whether theAdministration's financial statements are free of materialmisstatement, we performed tests of its compliance with certainprovisions of laws, regulations and contracts noncompliance withwhich could have a direct and material effect on the determinationof financial statement amounts. However, providing an opinion oncompliance with those provisions was not an objective of our auditand, accordingly, we do not express such an opinion. The results ofour tests disclosed no instances of noncompliance that are requiredto be reported under Government Auditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered theAdministration's internal control over financial reporting in orderto determine our auditing procedures for the purpose of expressingour opinion on the financial statements and not to provide assuranceon the internal control over financial reporting. Our considerationof the internal control over financial reporting would notnecessarily disclose all matters in the internal control overfinancial reporting that might be material weaknesses. A materialweakness is a condition in which the design or operation of one ormore of the internal control components does not reduce to arelatively low level the risk that misstatements in amounts that

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*A Professional Areounling Corporation

would be material in relation to the financial statements being audited may occur andnot be detected within a timely period by employees in the normal course of performingtheir assigned functions. We noted no matters involving the internal control overfinancial reporting and its operation that we consider to be material weaknesses.

This report is intended for the information of management. However, this report is amatter of public record and its distribution is not limited.

Lafayette, LouisianaSeptember 24, 2004

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SCHEDULE OF FINDINGS AND QUESTIONED COSTSYear Ended August 31, 2004

We have audited the basic financial statements of Sabine River Compact Administrationas of and for the year ended August 31, 2004, and have issued our report thereon datedSeptember 24, 2004. We conducted our audit in accordance with auditing standardsgenerally accepted in the United States of America and the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States. Our audit of the basic financial statements as of August31, 2004 resulted in an unqualified opinion.

Section I - Summary of Auditors' Reports

A. Report on Internal Control and Compliance Material to the Financial Statements

Internal ControlMaterial Weaknesses Yes X NoReportable Conditions Yes X None Reported

ComplianceCompliance Material to Financial Statements Yes X No

Section II - Financial Statement Findings

No matters were reported.

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SCHEDULE OF PRIOR FINDINGSFor the Year Ended August 31, 2004

Section I. Internal Control and Compliance Material to the Financial Statements

None reported.

Section II. Internal Control and Compliance Material to Federal Awards

Not applicable.

Section III. Management Letter

The prior year's report did not include a management letter.

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